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US – Crown lines up $2bn Cosmopolitan bid

By - 25 April 2014

Australian operator Crown Resorts is reportedly preparing a US$2bn bid for the three-year-old Cosmopolitan of Las Vegas, which is currently owned by Deutsche Bank.

Crown, owned by James Packer, will make a formal expression of interest for the Strip property. Deutsche Bank, Germany’s biggest bank, is believed to have attracted at least four possible bidders. The Cosmopolitan opened next door to Bellagio on the Strip in December 2010 at a cost of $3.9bn, but has since made net losses of $298.3m during its first three years of business. However the resort’s revenue increased by 9.6 per cent to a record $653m last year putting Deutsche Bank in its best position to sell since it took over ownership having foreclosed on its previous owner.

Rob Heller, Chief Executive Officer of Spectrum Gaming Capital, an investment bank in New York, said: “It’s a compelling asset, great rooms, great location, terrific restaurants and a great reputation among the younger, hipper crowd. Anyone and everyone in the gambling industry wants to be in Vegas.”

Crown has certainly wanted to be in Vegas over the years with two disastrously expensive attempts to enter the market. In 2007 it bought Cannery Casino Resorts for $1.75bn, investing $250m for a 19.6 per cent stake in the failed Fontaine¬bleau Resort. The casino remains unopened and unfinished. In 2008 it cancelled a proposal to build Crown Las Vegas, which would have been the tallest building on the Strip at a cost of $5bn, saying it was not ‘commercially viable.’ It lost $44m on the project.

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